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Applying SWOT Analysis: Case Study

Instructor: LeRon Haire
In this lesson, we will define the SWOT analysis (strengths, weaknesses, opportunities, threats) and explain how it relates to businesses today. The lesson will also make suggestions and recommendations for entering a new market.

What is SWOT?

Before we proceed further, let's define the acronym SWOT. SWOT stands for 'strengths, weaknesses, opportunities, and threats'. A SWOT analysis is useful because it helps an organization to determine where they stand in the market and whether or not they hold a competitive advantage over competitors. Let's take a look at McDonald's, which is one of the more popular organizations in the world, and analyze it using a SWOT analysis.

A SWOT analysis allows an organization to gauge performance in four important areas.
swot

Strengths

The strengths of an organization are typically the pillars which make it a success. Due to its vast success domestically and globally, McDonald's has several strengths. Let's take a look at some of the strengths of the McDonald's corporation:

Global Reach

McDonald's has operations in several different countries across the world. This global reach allows McDonald's to be in several different markets worldwide.

Brand Recognition

Who doesn't recognize the golden arches forming the M that makes the logo for McDonald's? McDonald's is renowned for being recognizable for that same logo, as well as for their popular mascot, the red-haired Ronald McDonald clown.

Joint Ventures

Not only does McDonald's stand alone in independent stores, it also is located in Walmart stores, airports, and even inside amusement parks located across the globe.

Diversity

Since McDonald's is established in various countries, they have been successful in adapting their menus to fit the preferences of the native country that they are in. For example, McDonald's locations in Hawaii offer pineapples, which are not offered at their sites in other U.S. states or in other countries. This is beneficial because Hawaiians have pineapples as a major part of their diet.

Weaknesses

In contrast to an organization's strengths, an organization's weaknesses are those things which the organization considers negative in terms of benefiting their bottom line. Here are some of the weaknesses of McDonald's:

Limited Options

McDonald's is famous for their hamburgers, french fries, and their chicken nuggets. This puts them in a small niche market that does not include other major food items such as tacos, pizza, or hot dogs.

High Turnover

McDonald's has been known for being a 'revolving door' for employees who work there. This high turnover creates higher training costs for the company as well.

Lack of Additional Healthy Options

Although some initiatives have been implemented to provide healthier options, McDonald's still lags behind several other competitors when it comes to providing healthier menu options for consumers. Unlike McDonald's, other fast food chains and restaurants promote organic food choices along with fresh, never-frozen ground beef for items such as hamburgers.

Opportunities

The opportunities in a SWOT analysis are those things that provide a chance for an organization to grow and become an more viable competitor in the market. Here are some opportunities for McDonald's:

Expand Menu

Since McDonald's largely dominates the market for hamburgers, a prime opportunity would be for it to enter another food industry, such as tacos or pizza. This expansion of the menu could also include beverage choices as well.

Healthy Menu Options

Healthy menu options for McDonald's are considered a weakness, but could also be seen as an opportunity. As an opportunity, this allows McDonald's the chance to add healthier items, such as additional salads and sugar-free dessert items for adults as well as children.

New Business Ventures

McDonald's is already located in establishments other than their typical independent stores. The opportunity exists for McDonald's to advance that trend with even more business ventures. This could include possible expansion into movie theaters and perhaps even traditional schools.

Threats

In the SWOT analysis, threats are those things which can be a negative for a business or organization. Here are some of the threats facing McDonald's:

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